S&P 500 closing in on record amid negative real yields

Markets were mostly higher on Wednesday.

The S&P 500 rose 1.4 percent, the STOXX Europe 600 rose 1.1 percent and the Nikkei 225 rose 0.4 percent.

The rise on Wednesday put the S&P 500 within 0.2 percent of its record high of 3,386.15.

“With the second wave of the virus coming under control, and jobs and spending continuing to recover faster than expected, corporate earnings have come in above expectations and appear on track to get back to pre-pandemic levels ahead of schedule,” wrote Brad McMillan, chief investment officer for Commonwealth Financial Network.

However, it is not just the stock market that has been rallying. A MarketWatch report noted that deeply negative real yields “are driving gains in all corners of financial markets”.

While the report suggested that this is leading to crowded positioning in assets and raising risks in the event of a rise in interest rates, at least some analysts remain sanguine.

“There is a view in the market that if rates were to rise and if there were any issues while the economy would continue to struggle the Fed would step in to do whatever is required,” said John Canavan, an analyst at Oxford Economics.